Emirates NBD sees modest lending growth in 2013

DUBAI: Emirates NBD expects loan growth to remain relatively modest as global uncertainty hits demand, Dubai’s largest bank said after posting forecast-beating quarterly results due to lower bad loan provisioning.
Net loan growth was expected to be 5 to 6 percent in 2012 and may dip to 4 to 5 percent next year, Chief Executive Rick Pudner said.
“Given the global economic uncertainty, the atmosphere is still cautious,” Pudner said, after ENBD reported loans and advances had increased by 5 percent in the first nine months.
Despite signs of recovery in the wider economy, loan growth for the UAE banks was just 1.8 percent in the first eight months, according to the latest central bank data.
In terms of lending to government and quasi-sovereign entities in the UAE, ENBD is still talking to the central bank about new rules aimed at limiting the banks’ lending to such firms, Pudner said, despite the passing of a Sept. 30 deadline for banks to cut their exposure.
Many of the UAE’s largest lenders are outside the new limits while they wait to see whether the authorities will enforce the new rules or give banks more time to comply.
The new rules aim to prevent any repeat of Dubai’s corporate debt crisis, which erupted in 2009 as the real estate market crashed and was heightened by excessive lending to state firms.
Meanwhile Pudner declined to comment on whether ENBD was interested in the Egyptian operations of BNP Paribas. Sources said recently ENBD had bid for the business.
The lender, 55.6 percent-owned by state fund Investment Corporation of Dubai, made a net profit of AED640 million ($174 million) in the three months to Sept. 30, up from AED175 million in the same period last year.
The rise was helped by a 36 percent drop in provisions to AED1.01 billion from 1.57 billion a year ago, as well as a 21 percent rise in non-interest income.
The lender was hit hard by impairments last year, with its exposure to indebted Dubai state-linked entities the primary reason.
ENBD provisioned a further 90 million dirhams against its lending to state entity Dubai Group, taking total impairments to AED 1.56 billion, Ben Franz-Marwick, head of investor relations said on a results news conference call.
He also said reaching a deal on the $10 billion restructuring of Dubai Group is likely take another three to six months and there was still uncertainty over the final terms.
Three international banks began legal action against the unit of the Dubai investment vehicle last month after nearly two years of unsuccessful talks.
“ENBD’s results were in line with our expectations and largely void of any surprises,” said Naveed Ahmed, senior financial analyst at Global Investment House in a note. An average of four analysts polled by Reuters had forecast a net profit of AED 514.4.
ENBD’s share price closed flat at AED 2.94.